NEW YORK, Oct. 21, 2021 /PRNewswire-PRWeb/ -- Turner & Townsend has released its latest annual Data Center Cost Index and Survey for 2021. The fifth Data center cost index looks at more global markets than ever – 44 locations, up from 40 in 2020, and 32 in 2019. While costs increased by some degree in almost every market in a year of supply disruption and demand growth, most markets were steady relative to others – with few big leaps or falls.
Global Data Center Construction Cost (measured in $/watt)
Zurich has given up its traditional position as the most expensive data center market, as its $12.0/w cost is overtaken by Tokyo at $12.5/w. Tokyo was second place in 2020, but rising construction costs in general, highlighted in our 2021 International construction market survey where it also topped the table, have pushed it into first.
Costs remain high in California's Silicon Valley and New Jersey – both continuing to share the joint third position at $10.3/w, up from $9.8/w in 2020. Intense market competition in North America means investment appetite is continuing to shift to Europe where it is possible to achieve higher yields and more favorable returns than in the USA. While the traditional Frankfurt, London, Amsterdam, Paris and Dublin (FLAPD) markets remain popular, demand is also rising in secondary and tertiary markets, with new hotspots including Istanbul, Athens and Berlin.
Data Centers in North America
Despite the disruption caused by COVID-19, the data center market in North America has remained strong in 2021 following a record year in 2020. Growth is being dominated in Northern Virginia, Dallas, Phoenix, Chicago, Silicon Valley and Atlanta. However, despite soaring demand, there has been acute staffing shortages due to COVID-19, which have restricted data center construction capacity in North America and impacted supply chains.
North Virginia continues to be the world's largest data center hub, continuing to outpace other markets this year. Dallas has maintained its position as the second-largest data center market in the US. The low cost of land, affordable power, robust fiber infrastructure and economic incentives continue to attract data center developers and operators to the region.
Silicon Valley is the third-largest data center market in the US. Despite expensive land, comparatively high cost of power and risk of natural disasters, this market continues to attract investment due to its proximity to the hyperscale cloud providers, who account for the vast majority of market absorption. And, the New York Tri-State area, which includes New Jersey, remains within the top ten data center markets in the United States.
In Canada, the Greater Toronto Area (GTA) is home to the 'Toronto to Waterloo Technology Corridor', the second largest technology cluster in North America. However, while Toronto continues to be an important Canadian market for data centers, with many hyperscale developments underway, Montreal has seen more activity in 2021.
Key Survey Response Statistics
Market Conditions
- 82% of respondents rate data center construction market conditions as hot or overheating
- 84% report skills shortages for experienced data center construction teams
- 87% agree that global material shortages have caused delays to data center construction and cost escalations
Industry Challenges: innovation and sustainability
- Survey respondents were split 50:50 on net zero deliverability, as the industry grapples with challenges of decarbonization
- 40% consider net-zero carbon data centers to be achievable within 5 years, compared to 34% who believe it's not possible
- Only 29% report that modern methods of construction are being widely used on data center projects
Future Outlook
- 58% of respondents expect the proportion of retrofit/conversion of existing stock, instead of new builds, to increase year-on-year
- 70% of respondents consider the data center industry to be "recession proof"
- 95% of respondents predict data center construction demand in 2022 will be greater than 2021.
Commenting on the research, Joe Connolly, Vice President and Data Center Lead at Turner & Townsend, said:
"The challenge for the global industry is how to deliver investment against a backdrop of rising material and labour costs as well as a critical decarbonization agenda. The sector needs to adopt a programmatic approach which looks holistically at supply chain capability – identifying areas of innovation in build processes and ongoing operations that improve cost and carbon performance."
Media Contact
Christopher Villari, Turner & Townsend, +1 9179405963, [email protected]
SOURCE Turner & Townsend
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